Strategies for the Looming Pharma Patent Cliff

Image Credit: Adobe Stock Images/A-TiMe

In the past few years, the number of expiring patents in the pharma industry have been relatively low. In the latter half of this decade, these numbers are expected to increase substantially.

At the Financial Times’ Global Pharma and Biotech Summit 2024, a panel consisting of Mads Jessen, managing director, Moelis & Company; Marjan Noor, partner, life sciences sector lead, A&O Shearman; and Virginia Acha, associate VP, global lead, global evidence and regulatory policy, MSD; discussed topics such as which pharmaceutical companies are most exposed to the looming patent cliff, how companies have become more adept at protecting key drugs, the most lucrative opportunities for generic and biosimilar manufacturers, and what companies are doing to replenish pipelines.

Kicking off the panel, moderator Ian Johnston, global pharmaceutical correspondent, Financial Times, asked Jessen how big of a problem this patent cliff could be moving forward.

“We’ve been looking at it for a couple of years, but I think somewhere between $180 billion to $200 billion will come off the patent list between now and 2030,” said Jessen. “It’s now really starting to impact people who are thinking about how to protect their pipelines and how it’s been driving M&A.”

Acha also offered her perspective on how substantial the issue could be, noting there hasn’t been a substantial spike in parent expirations since 2016.

“They’re basically a reflection of success, meaning that you’ve had some great therapeutic treatments,” she said. “Every company that’s looking at that has a good understanding of when it will be. They’re building out their portfolios and their pipelines to be as ready as they can for it. But I think it also must be understood in the context of which it’s happening. The value of that product is still there, but you need to understand the competitive environment that it will be in.”

Moving forward, Johnston asked the panelists about strategies that could tackle the issue, from M&A to potentially extending patents.

“I think companies are focusing on their broader portfolios that cover patents and taking steps to defend those patents if they’re challenged,” stated Noor. “Also, looking at amendments to those patents to focus more closely on their actual product, making them more robust from the challenges.”

Johnston then went back to Acha, asking her to elaborate on how Merck specifically deals with a looming patent cliff with drugs such as Keytruda (pembrolizumab).

“Keytruda has been hugely valuable in oncology. We’re up to 41 different indications, and we’ve consistently and continuously invested in it. The original and subsequent patents have represented that important point around the patent system, which I think represents why patents are so important. It’s a critical way to incentivize innovation and it’s a way to make that bargain, whereby we are able to patent and fully disclose our science that others can also learn and build on that. For a period of time, there’s a protection for that specific technology.”

Noor also spoke about the patent system, emphasizing its importance in protecting original drugs.

“The patent system is robust in the sense that any company can invest in new indications for the product or other existing aspects of it in order to get a patent,” said Noor. “That is scrutinized. When a patent is granted and it can be successful for another product, it will often be opposed by other companies, and there is a system in place for that.”

Johnston then turned to Jessen to comment on shorter exclusivity periods, asking whether companies are increasingly focused on acquiring or licensing assets with extended exclusivity or ones that help mitigate the issue, particularly in the realm of small molecules.

“I think it becomes asset-specific, because part of this would always just go into the assessment of the commercial opportunity that then feeds into the value,” said Jessen. “So, I think there are certain assets that potentially would have benefited from being part of a larger organization, but it doesn’t change the fundamental of how pharma will have to look at investments from a return perspective.”